Projections reveal nonresidential construction spending to grow

Construction spending is projected to grow through 2019, according to a new consensus forecast from The American Institute of Architects (AIA).

Spending on nonresidential buildings nationally increased only modestly last year, barely outpacing inflation in building costs. Halfway through the seventh year of continuous growth for the cyclical construction industry, 2018 might have looked to be the year that the industry would enter another recession. However, when polled at the beginning of this year, the AIA Consensus Construction Forecast Panel—consisting of leading economic forecasters— instead saw an acceleration in activity, projecting 4.0 percent growth in 2018 and a nearly equal 3.9 percent in 2019.

“At the halfway point of the year, this panel is even more optimistic,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “Their forecasts have been marked up to 4.7 percent growth in spending for this year and an additional 4.0 percent in 2019. If these projections materialize, by the end of next year the industry will have seen nine years of consecutive growth, and total spending on nonresidential buildings will be 5 percent greater—ignoring inflationary adjustments—than the last market peak of 2008.”

Ryan Companies, Cadence Living and an affiliate of Starwood Captual recently announced a new 135-unit senior living community, Accoya Scottsdale Troon in Arizona, whose construction should be completed by mid 2020. A new report by Harvard's Joint Center for Housing Studies finds that seniors will have a hard time affording housing in the future. Image: Ryan Companies.

35 Hudson Yards, a 1,009-ft-tall mixed-use tower, is one of several major projects that will be completed between now and 2020, when a new report says New York's construction spending will start leveling off. Image: Courtesy of Related-Oxford

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